Jones v Ricoh UK Ltd

A confidentiality restriction must be construed in its commercial context, but the court will not rewrite an excessively broad bargain. A restriction preventing a corporate group from dealing with a wide class of customers may constitute a restriction of competition by object or effect under Article 101 TFEU and be void.

For breach of a negative contractual obligation, damages are assessed by examining the loss caused by the prohibited conduct and the probable counterfactual. The court may consider how the defendant would probably have acted in its own commercial interests. An account of profits remains an exceptional remedy and will generally be unavailable for breach of a purely commercial, non-fiduciary confidentiality obligation.

The claimant, as assignee of CMP Group Limited’s claims, alleged that Ricoh breached a trading-related Confidentiality Agreement. Ricoh was said to have used confidential information and approached or dealt with Bombardier in connection with invitations to tender in 2003 and 2007.

Ricoh applied for summary judgment. The claimant sought permission to amend the claim to plead damages, including damages assessed by reference to a reasonable release payment, and an account of profits. The central issues were whether the restriction in clause 7 was enforceable, whether the alleged 2003 breach disclosed a recoverable loss, whether the 2007 allegation had a realistic prospect of success, and whether an account of profits was available.

1. Clause 7. Clause 7 was exceptionally wide. Properly construed, it restricted Ricoh and associated companies worldwide from dealing with broad categories of persons, including clients of CMP, government and regulatory bodies, and persons with an actual prospective connection with CMP. The court would construe the commercial agreement sensibly, but would not rewrite it.
2. The restriction had the object, or alternatively the effect, of appreciably restricting competition. It therefore fell within Article 101(1) TFEU. The vertical block exemption did not apply because, on the claimant’s own case, CMP was assisting its clients to purchase equipment from Ricoh and was not operating as Ricoh’s distributor or reseller. Individual exemption under Article 101(3) was unsustainable. Clause 7 was consequently void and unenforceable.
3. Damages for the 2003 ITT. The minimum-performance principle did not defeat the claim. The claim was not for Ricoh’s failure to perform an obligation to submit a joint tender. It concerned loss allegedly caused by Ricoh’s prohibited use of confidential information to submit its own tender. For breach of a negative obligation, the counterfactual required an assessment of what would probably have happened if the prohibited conduct had not occurred. Ricoh’s probable commercial conduct could be considered. The claim was therefore not fanciful and was not suitable for summary dismissal.
4. Damages for the 2007 ITT. Although the allegation appeared improbable, there was sufficient evidence to give it a realistic prospect of success. It could proceed only if the claimant provided security for Ricoh’s costs in an amount and form to be determined.
5. Account of profits. Following the principles in A-G v Blake and the approach adopted in Vercoe v Rutland Fund Management Ltd, an account of profits was unavailable. The relationship was purely commercial and non-fiduciary, and nothing exceptional justified that remedy. The amendment was refused to that extent, but allowed insofar as it sought damages.